Briefly: In our opinion, speculative short positions are favored (with stop-loss at 2,210, and profit target at 2,050, S&P 500 index).

Our intraday outlook is bearish, and our short-term outlook is bearish. Our medium-term outlook is now neutral, following S&P 500 index breakout above last year's all-time high:

Intraday outlook (next 24 hours): bearish
Short-term outlook (next 1-2 weeks): bearish
Medium-term outlook (next 1-3 months): neutral
Long-term outlook (next year): neutral

The main U.S. stock market indexes gained 0.1-0.7% on Monday, as investors continued to hesitate following recent rally. The S&P 500 index remains close to its new all-time high at 2,169.05. The nearest important level of resistance is at 2,170, and the next potential resistance level is at 2,200. On the other hand, support level is at around 2,150-2,155, marked by short-term local lows. The next important support level is at 2,130-2,135, marked by previous level of resistance. There have been no confirmed negative signals so far. However, we can see some short-term overbought conditions accompanied by negative technical divergences:

Expectations before the opening of today's trading session are slightly negative, with index futures currently down 0.1-0.3%. The European stock market indexes have lost 0.4-1.3% so far. Investors will now wait for some economic data releases: Building Permits, Housing Starts at 8:30 a.m. The S&P 500 futures contract trades within an intraday downtrend, as it retraces some of its recent move up. The nearest important level of support is at around 2,150 mark. On the other hand, resistance level remains at 2,160-2,165, as we can see on the 15-minute chart:

The technology Nasdaq 100 futures contract follows a similar path, as it currently trades along the level of 4,600. The nearest important level of resistance is at 4,610-4,620. On the other hand, support level is at 4,570-4,580, among others. There have been no confirmed negative signals so far. However, there are some short-term technical overbought conditions:

Concluding, the broad stock market remained within a short-term consolidation on Monday, following recent rally. The S&P 500 index trades close to its new all-time high of 2,169.05. We still can see short-term overbought conditions accompanied by bearish technical divergences. Therefore, we continue to maintain our speculative short position (opened yesterday at around 2,162 - yesterday's average opening price of the S&P 500 index). Stop-loss level is at 2,210 and potential profit target is at 2,050 (S&P 500 index). You can trade S&P 500 index using futures contracts (S&P 500 futures contract - SP, E-mini S&P 500 futures contract - ES) or an ETF like the SPDR S&P 500 ETF - SPY. It is always important to set some exit price level in case some events cause the price to move in the unlikely direction. Having safety measures in place helps limit potential losses while letting the gains grow.

Thank you.

Paul Rejczak
Stock Trading Strategist
Stock Trading Alerts